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What GAO Found

In recently completed work, we found that medical facilities (such as medical centers, clinics, and practices) and durable medical equipment suppliers were the most frequent subjects of criminal fraud cases in Medicare, Medicaid, and CHIP in 2010. Hospitals and medical facilities were the most frequent subjects of civil fraud cases, including cases that resulted in judgments or settlements. According to 2010 data, about one-quarter of the 7,848 subjects investigated in criminal health care fraud cases were medical facilities or were affiliated with these facilities. Additionally, about 16 percent of subjects were durable medical equipment suppliers. Among the subjects investigated in criminal fraud cases, a small percentage (approximately 3 percent) were individuals who were beneficiaries of health care programs. Hospitals constituted nearly 20 percent of the 2,339 subjects of civil fraud cases investigated in 2010, and other medical facilities accounted for about 18 percent of the subjects. Less than 1 percent of subjects involved in civil health care fraud cases were beneficiaries of health care programs. CMS has made progress in implementing strategies to prevent fraud, and recent legislation provided it with enhanced authority. However, CMS has not implemented some of the key strategies we identified in our prior work to help CMS address challenges it faces in preventing fraud. Among others, these strategies include strengthening provider enrollment processes and standards, improving pre- and post-payment claims review, and developing a robust process for addressing identified vulnerabilities.

Why GAO Did This Study

This testimony discusses our work regarding health care fraud in Medicare and to discuss strategies that could help reduce fraud. Since 1990, GAO has designated Medicare as a high-risk program, as its complexity and susceptibility to payment errors from various causes, added to its size, have made it vulnerable to fraud. Since 1997, Congress has provided funds specifically for activities to address fraud, as well as waste and abuse, in Medicare and other federal health care programs.

In fiscal year 2011, the federal government allocated at least $608 million in funding to investigate and prosecute Although there have been convictions for multimillion dollar schemes that defrauded the Medicare program, the extent of the problem is unknown as there are no reliable estimates of the magnitude of fraud in the health care industry. Fraud is difficult to detect because those involved are engaged in intentional deception. According to the Department of Health and Human Services' Office of Inspector General (HHS-OIG), common health care fraud schemes include providers or suppliers billing for services or supplies not provided or not medically necessary, purposely billing for a higher level of service than that provided, misreporting data to increase payments, paying kickbacks to providers for referring beneficiaries for specific services or to certain entities, or stealing providers' or beneficiaries' identities.

Since 1997, Congress has provided funds specifically for activities to address fraud, as well as waste and abuse, in Medicare and other federal health care programs. In fiscal year 2011, the federal government allocated at least $608 million in funding to investigate and prosecute cases of alleged fraud in health care programs. The Centers for Medicare and Medicaid Services (CMS)--an agency within HHS--oversees Medicare, Medicaid, and the Children's Health Insurance Program (CHIP). Along with its contractors, CMS works to reduce fraud. The HHS-OIG along with the Department of Justice (DOJ)--including its Criminal and Civil Divisions, the U.S. Attorney's Offices (USAOs) throughout the country, and the Federal Bureau of Investigation (FBI)--work together to investigate and prosecute cases of health care fraud.

This testimony focuses on the types of providers that have been investigated for fraud and the outcomes of those investigations, and strategies that could be used to combat Medicare fraud. This statement is informed primarily by our September 2012 report on health care fraud and 8 years of prior work on fraud, waste, and abuse in health care programs.

For information, contact Kathleen M. King at (202) 512-7114 or kingk@gao.gov.